Somebody will pay

State regulators discuss how PG&E would fund Diablo Canyon's relicense

It’s been close to two years since Pacific Gas & Electric announced it was beginning the relicensing process for Diablo Canyon nuclear power plant, but the battle for who will be on the hook to pay for it is just heating up.

Following the Fukushima Daiichi catastrophe in Japan, PG&E asked the California Public Utilities Commission—which regulates funding for the state’s utility companies—to “suspend” its application requesting ratepayer funding for Diablo Canyon’s renewal. The company asked for a reprieve so it can complete long-awaited studies outlining the seismic landscape around the 2,240-megawatt facility.

PG&E estimates those studies will be complete and handed over to the Nuclear Regulatory Commission no later than 2015.

But some critics of PG&E say simply stalling the gears of the process is not enough. On July 7, attorneys for PG&E—backed by the CPUC’s Division of Ratepayer Advocates—and the watchdog group The Utility Reform Network, went before a CPUC administrative law judge in San Francisco. They were there to defend PG&E’s request after the Alliance for Nuclear Responsibility, a ratepayer advocacy group, asked the CPUC to dismiss PG&E’s application outright until the studies are completed.

Alliance Executive Director Rochelle Becker argued to Administrative Law Judge Robert Barnett that any information contained thus far in PG&E’s application will be rendered obsolete by the time the studies are finished and submitted to the NRC.

“We don’t know what the NRC is going to come out with as far as new requirements for technology,” Becker testified. “We don’t know whether they will be cost-effective or not cost-effective. We don’t even know how many faults we are dealing with at Diablo Canyon. So many things are up in the air, how this commission could reasonably and prudently base [and] give the utility one penny or pass for three years to come back for this same application makes no sense to us whatsoever.”

PG&E attorney Mark Patrizio argued that dismissing the application would essentially require the company to start over from square one.

“It is PG&E’s expectation that these seismic studies will not have dramatically changed things,” he testified.

PG&E is asking the CPUC to authorize the use of roughly $80 million in future electric rates to pay for the relicensing process. PG&E Spokesman Blair Jones told New Times the sum covers costs associated with a variety of things, including preparing the application, safety and environmental reviews, funding advisory committees, and planning for accident mitigation.

Blair added that the application is nearly three-quarters of the way through the CPUC process, which has involved years of the sort of work you’d expect to come with an $80 million settlement—all of which would be void should Barnett grant the Alliance’s motion.

“We believe that a suspension of the proceedings is preferable, as a dismissal would obviate the settlement agreement reached among PG&E, the Division of Ratepayer Advocates, and The Utility Reform Network,” Jones said in an e-mail response to New Times. “Additionally, dismissing the proceeding would remove from the record all of the testimony filed in support of cost recovery.”

Supporters of the Alliance’s motion argue that any go-ahead given to PG&E to charge their customers before facts are in about potential seismic retrofitting or other improvements that could be necessary would leave PG&E customers picking up an even greater tab in the future.

Ultimately, Barnett’s decision will hinge on the question of whether he believes PG&E can reasonably state that the studies won’t change its assumptions enough to affect the work completed so far.

“Those [renewal] processes, and the cost of going through those processes … will not change regardless of the seismic study results,” Jones told New Times. “There is some potential for the cost effectiveness analysis to require updating in the event the seismic study results require updates to the plant. PG&E’s suspension proposal allows that to be considered.”

PG&E says voiding the entire application is unnecessary and could end up costing customers more, the main reason The Utility Reform Network—a group that has been historically critical of PG&E—sided with the company in opposition to the Alliance. Patrizio said during the hearing that he couldn’t “unambiguously state” whether the $80 million necessary for licensing today won’t change to a larger sum five years
down the line.

Another point of contention seems to be to what extent PG&E’s seismic studies will be independently reviewed before they’re used as a “trigger” to restart the application process. But Jones pointed out that the seismic studies will be reviewed by an independent peer review panel, as established by the CPUC when it authorized ratepayer funding for the seismic studies.

So far it’s anybody’s guess how Barnett will rule on the competing motions. Though he acknowledged the substantial work already put into the application, he did chide PG&E over one technical consequence of their suspension request. According to state law, the CPUC has an 18-month window in which to complete an application process. Suspending PG&E’s application would require the CPUC to file an extension every 60 days until it’s picked back up in 2015.

“I’ve had a number of these cases before me where I’ve extended the deadline, and it’s a pain in the neck, let me tell you,” Barnett told PG&E’s attorney.

Barnett is expected to make his ruling in the coming weeks, and his decision will go before the five-member commission for approval before becoming official. ∆